Advocacy Update: Federal Reserve Cuts Interest Rates; Government Funding Update; Capitol Hill Updates; more
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Federal Reserve Cuts Rates by 25 Basis Points
In response to current economic conditions, including the weakening labor market, the Federal Reserve cut the federal funds rate by 25 basis points to a target range of 4.00-4.25% on Wednesday.
Why it matters: The Committee emphasized that it “will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”
MBA’s take: “The projections show that the median FOMC member anticipates two additional cuts in 2025 and one more in 2026, with the expectation that the job market will remain soft while inflation, while rising, won’t move too far before returning to the Fed’s 2% target,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “While the decision was not unanimous, with one dissent from the newest governor, Stephen Miran, the strong vote for the 25-basis-point cut suggests that members, while acknowledging that downside risks to the job market have increased, are not panicking about the state of the economy.”
• Read more of Fratantoni’s commentary here.
For more information, please contact Mike Fratantoni at (202) 557-2935.
MBA Monitoring Developments Ahead of Possible October 1 Government Shutdown
This morning, the full House of Representatives passed a bill that seeks to avert a government shutdown ahead of a deadline of 11:59 p.m. ET on September 30, 2025. The short-term Continuing Resolution would extend Fiscal Year (FY) 2024-2025 funding levels through November 21, 2025.
• The debate on the CR now moves to the Senate, where 60 votes are needed amidst a stalemate between Republicans and Democrats. Senate Democrats agreed to keep the government funded earlier in the year but have been insisting (along with House Democratic leaders) that certain healthcare-related priorities be added to the current GOP proposal.
• Importantly, National Flood Insurance Program (NFIP) authorities are also scheduled to expire on October 1. An NFIP extension is currently provided for in the current House bill text but could be at risk if the Senate CR debate stalls. A lapse in the NFIP would be disruptive, especially at closing time for loans relying on the program. MBA will continue its work with lawmakers and agency officials in calling for an extension of NFIP’s authority – including a possible separate/targeted authorization measure – to avoid disruptions to the flood insurance market.
• Rest assured, MBA also remains directly engaged with lawmakers in both chambers of Congress and with affected regulators. Starting on October 1, a shutdown would necessitate a furlough of certain federal employees and significant curtailment of certain operations requiring agency staff intervention or action at the Departments of Housing and Urban Development (HUD), Veterans Affairs, and Agriculture.
Go deeper: Congress last passed a CR on March 14, 2025, that extended FY 2024 funding levels until September 30. Lawmakers initially failed to pass a full FY 2025 budget before the start of the new FY on October 1, 2024.
What’s next: Given that short-term shutdown threats have become somewhat routine, MBA anticipates that most agencies have begun their plans for maintaining essential functions.
• Once confirmed, MBA will provide a member guide that outlines the potential impacts to single-family and multifamily government lending programs.
A shutdown lasting a few days would only slightly inconvenience single-family and multifamily mortgage markets. A longer delay would have much more severe and disruptive impacts to members and the consumers, end users, and customers they serve.
For more information, please contact Bill Killmer at (202) 557-2736 and Jamie Woodwell at (202) 557-2936.
Senate Allows for En Bloc Nominee Confirmations by a Majority Vote
Senate Majority Republicans over the past week have gone through the procedural steps to begin confirming groups of Executive Branch nominees by a majority vote.
• Under this new precedent, an unlimited number of a President’s nominees (if they are below the head of agency level on their pay schedule) can be considered en bloc (at the same time) by a majority vote of the Senate. Confirming larger numbers of non-controversial nominees at the same time in the Senate has been the practice for a very long time, but doing so has required unanimous consent.
Go deeper: Changing the precedents regarding nominees requires a majority vote (51), while changing the standing rules of the Senate requires a two-thirds vote (67), which is why some commentators refer to this as exercising a “nuclear option.” During both Democratic and Republican presidencies and Senate majorities, the last 20 years of data shows between 41-94% of nominees have been confirmed by unanimous consent.
• Senate Republicans have emphasized that thus far during President Trump’s second administration, Senate Democrats have objected to all nominees moving by unanimous consent. Since 2013, both Democratic and Republican Senate majorities have exercised various forms of “nuclear options” to modify precedents and speed up the confirmation of nominees.
Why it matters: The new Senate precedent allowing for the confirmation of larger groups of nominees at the same time means civilian political (i.e., non-career) appointees across government agencies – like those at key agencies for our industry like HUD, Treasury, and other independent agencies – can be more quickly confirmed and placed into their policy-making roles.
• The precedent change will apply to the rest of President Trump nominees below the head of agency level, and it will be available for future presidential administrations and Senate majorities to use. The change does not impact federal judicial nominations.
For more information, please contact George Rogers at (202) 557-2797 or Ethan Saxon at (202) 557-2913.
MBA Supports Introduction of Bill to End FHA Mortgage Insurance “Life-of-Loan” Requirement
Last week, Rep. Gregory Meeks (D-NY), along with Rep. Pete Sessions (R-TX), introduced the bipartisan Mortgage Insurance Freedom Act, legislation that would end the Federal Housing Administration’s (FHA) policy requiring mortgage insurance premiums for the full life of the loan.
• In a letter of support for the bill’s introduction, MBA welcomed the bill’s intent, noting that aligning FHA’s rules with the conventional market would enhance affordability and improve sustainable access to homeownership—particularly for first-time and low- to moderate-income borrowers.
Why it matters: Removing the “life-of-loan” requirement would bring FHA loans into greater parity with GSE offerings and lower long-term costs for borrowers.
What’s next: While noting the Meeks/Sessions bill’s introduction, MBA will continue to urge HUD to use its administrative authority to evaluate and address this issue through a data-driven policy process.
For more information, please contact Rachel Kelley at (202) 557-2816 or Madisyn Rhone at (202) 557-2741.
MBA Responds to Senate RFI on Flood Insurance
On Monday, MBA responded to a request for information from Senators Bill Cassidy (R-LA) and Cory Booker (D-NJ) on the National Flood Insurance Program (NFIP).
• The request asked for suggestions for improvements to the program. MBA stressed the need for a long-term reauthorization of the NFIP to avoid market volatility. MBA also urged reform to the mandatory purchase provisions for commercial properties and increases to the coverage limits for same.
Why it matters: Prior Congresses have struggled to reach a consensus on a long-term set of program reforms to the NFIP, including those that would put the program on a more sound actuarial footing.
What’s next: Current NFIP program authorities expire on October 1 and could lapse if there is a government shutdown. These Cassidy/Booker-led efforts will help advance debate and dialogue on the need for action on flood insurance this Congress.
For more information, please contact George Rogers at (202) 557-2797 or Megan Booth at (202) 557-2740.
USDA Adjusts PITI Ratio Requirements
On Tuesday, the Department of Agriculture Rural Housing Service (RHS) announced an update to the credit standards for the Single Family Housing Guaranteed Loan Program (SFHGLP). Effective November 4, 2025, the maximum allowable Principal, Interest, Taxes, and Insurance (PITI) ratio will be reduced from 31% to 29%. Exceptions up to 32% may apply if the loan receives an “Accept” or “Accept Full Documentation” recommendation in GUS, or if the borrower has a minimum credit score of 680 and can demonstrate an acceptable compensating factor as outlined in the RHS SFHGLP Handbook.
• Applications without a Conditional Commitment by the effective date, or those resubmitted in GUS on or after November 4, 2025, must comply with the new standard.
Why this matters: By lowering the PITI ratio limit from 31% to 29%, USDA is effectively reducing the share of a borrower’s income that can go toward housing costs. This move generally tightens credit availability and may reflect the agency’s concern about rising delinquencies and borrower risk.
What’s next: MBA will continue to monitor USDA and the other government housing agencies updates impacting credit qualifications.
For more information, please contact Darnell Peterson at (202) 557-2922.
House Financial Services Committee Advances Bills Supporting Community Bank Liquidity and Regulatory Reform
On Tuesday, the House Financial Services Committee advanced 11 bills during a full committee markup. Relevant measures include the Community Bank Deposit Access Act (H.R. 5317) and the Keeping Deposits Local Act (H.R. 3234)—bipartisan efforts to expand access to reciprocal and custodial deposits for smaller institutions, including CDFIs and MDIs. The Committee also approved the Community Bank LIFT Act (H.R. 5276) to lower capital thresholds under a simplified leverage ratio. Lawmakers advanced the FSOC Improvement Act (H.R. 3682) to promote transparency in systemic risk designations.
• Find the summary of the markup proceedings here.
Why it matters: Though none of these proposals were specific MBA legislative priorities, they’re designed to support stable funding for community lenders and (in part) to help support mortgage credit access in underserved markets.
What’s next: Although it is unclear at this time when these specific bills will advance further in the House (or Senate), MBA will continue advocating for policies that enhance liquidity and foster a competitive, sustainable housing finance system.
For more information, please contact Rachel Kelley at (202) 557-2816 or Madisyn Rhone at (202) 557-2741.
Recap of MAA’s September 10 Quarterly Webinar: Sustained Advocacy Drives Results!
MBA’s Legislative and Political Affairs Team hosted the Mortgage Action Alliance’s (MAA) Quarterly Webinar last week, which covered expectations for the remaining congressional agenda in 2025 and the likelihood of a government shutdown.
• The team highlighted MAA’s Advocacy in August campaign, recent legislative achievements, MBA’s key policy priorities, a preview of the top races to watch in the 2026 midterm elections, and more. Click here to listen to the full recording.
Why it matters: With the 2026 midterm election looming, and in a highly unusual period of special elections and redistricting battles, it is important to stay engaged in advancing our industry’s interests.
• MAA’s Quarterly Webinar Series provides valuable insights into the legislative process and policy landscape, allowing MBA/MAA members to effectively engage in advocacy year-round.
What’s next: Save the date for MAA’s next Quarterly Webinar, 365 days prior to the 2026 elections, on Tuesday, November 4, 2025. Additionally, register now to attend MBA’s National Advocacy Conference (NAC), taking place April 14-15, 2026, at The Westin DC Downtown.
• Join hundreds of industry advocates to meet with and educate policymakers on issues impacting your businesses and customers. It’s never too early to make your plans!
• Register by March 2, 2026, to receive the early bird rate. MBA offers special rates for members of MBA’s young professionals’ network (mPact), the Certified Mortgage Banker (CMB) Society, and group rates for MBA member companies as well.
For more information, please contact maa@mba.org or Margie Ehrhardt at (202) 557-2708.
MBA-opposed Artificial Intelligence Bill Dies in California Legislature
The California Legislature adjourned on September 13th without voting on a problematic broad artificial intelligence bill, AB 1018. While the Legislature attempted to address industry issues with some targeted exemptions, it still fell short of addressing duplicative disclosure requirements and risked further increasing the cost of credit in the state.
Go deeper: AB 1018 included exemptions for developers and deployers subject to the Gramm-Leach-Bliley Act from several provisions, but did not exempt the GSEs, or address the duplication in disclosures and regulation in the California Consumer Privacy Act (CCPA) or the nature of the mortgage industry as a whole. Ultimately, these shortcomings led MBA, the California MBA and other coalition partners to send a joint letter in opposition to the bill during the final days of session.
Why it matters: AB 1018 failed to acknowledge current regulations for the mortgage industry, specifically the high standard of transparency and existing mandated disclosures. Additionally, the CCPA requires the California Privacy Protection Agency (CPPA) to promulgate regulations around the use of automated decision-making technology, and that proposal was just modified in May. CCPA’s requirement to promulgate regulations for the same technology covered by AB 1018 posed in-state duplicative and potentially conflicting regulation.
What’s next: MBA continues to support the California MBA’s efforts to address CPPA’s regulations regarding automated decision-making technology and will continue supporting efforts to educate policy makers on the mortgage industry’s current regulatory framework and find solutions for any concerns or perceived gaps in regulation.
For more information, please visit the MBA resource center at mba.org/stateai or contact Liz Facemire at (202) 557-2870 or Gabriel Acosta at (202) 557-2811.
REMINDER: Prepare for NMLS Changes
As previously reported, the NMLS launched significant changes Saturday as part of its broader system modernization efforts. MBA encourages members’ licensing and registration staff to familiarize themselves with the new system ahead of this year’s licensing renewal season, as the layout, bookmarks and organizational structure of the system will be significantly different.
The key updates to the system include:
• A modernized NMLS Resource Center with new navigation and content;
• New, streamlined individual application process for individual applications;
• System updates for new policies such as new remote work policies and the adoption of the latest Mortgage Call Report (MCR) Form Version 7; and an
• Updated policy guidebook.
Why it matters: MBA members are encouraged to review the materials in the NMLS Modernization Resource Center. This includes FAQs, recorded Town Hall webinars, release notes, PowerPoints, and much more.
What’s next: MBA members can attend the MBA’s Compliance and Risk Management Conference on September 28-30 in D.C., where CSBS staff and industry experts will review and discuss these changes.
For more information, please contact William Kooper (202) 557-2737 or Liz Facemire (202) 557-2870.
Upcoming MBA Education Webinars on Critical Industry Issues
MBA Education continues to deliver timely single-family programming that covers the spectrum of challenges, obstacles and solutions pertaining to our industry. Below, please see a list of upcoming and recent webinars – all complimentary to MBA members:
• Strategies for Improving Revenue by 10-25 BPS in Today’s Market – Sept. 23
• Smart Strategies to Retain, Recapture, & Grow Your Servicing Portfolio – Sept. 25
• Non-Agency Training Series: Alt Doc and Interest-Only – Sept. 30
• Leveraging Rental Payment History – Part I: Current GSE Policy and Recent Enhancements – Nov. 6
• Leveraging Rental Payment History – Part II: Industry Practices and Consumer Experience Improvements – Nov. 13
MBA members can register for any of the above events and view recent webinar recordings by clicking here.
For more information, please contact David Upbin at (202) 557-2931.
